Breadcrumbs

Change in Information Reporting by Pass-Through Entities

The regulation establishing withholding obligations on pass-through entities requires that pass-through entities that are not exempt must file an annual schedule characterizing the member as an individual or entity, and documenting how each member is meeting its Massachusetts tax obligation and how much tax has been withheld on behalf of each member. The Commissioner has changed the way this information is to be reported. Each pass-through entity must report the required information as part of its Schedules 2K-1, 3K-1 or SK-1 rather than on an annual schedule. A pass-through entity must file its returns, including the Schedules 2K-1, 3K-1 and SK-1, electronically unless its members consist entirely of resident individuals. In addition, any pass-through entity withholding tax on a member's distributive share or receiving distributive share for which a lower-tier entity has paid withholding or estimated taxes must file its returns electronically. See TIR 09-18.

The Commissioner intends to make conforming changes to the Pass-Through Entity Withholding Regulation, 830 CMR 62B.2.2.

Provide information regarding each member.(new section) A pass-through entity that is not exempt must file all returns electronically. Information must be filed for each member. As part of the electronically filed Schedule 3K-1 and SK-1 forms, the pass-through entity will be asked to provide information identifying the member as an individual resident or nonresident, trust or estate, S-corporation, corporation, etc. At the end of the Schedules 3K-1 and SK-1, the pass-through entity will indicate how the member is meeting the member's tax obligation. Space is provided to indicate amounts withheld or paid as part of a composite filing. Similar information is required on the Schedule 2K-1. No other annual schedule of information regarding members is required.